This is a freeview 'At a glance' guide to Adjusted Net Income, what is it and why it is relevant.

What is Adjusted Net Income?

At a glance

Taxpayers are required to work out their 'Adjusted Net Income' in order to calculate whether they are higher rate taxpayers for the purposes of the Personal savings allowance, the High-Income Child Benefit charge, the income-related reduction to the Personal allowance for any taxpayer who has adjusted net income over £100,000 and for Higher personal allowances given to those who were born before 6 April 1948.

A person’s adjusted net income for a tax year is determined as follows:

  • Step 1: Take your net income for the year, which is your total taxable income including employment income, self-employed income net of trade losses, rental and investment income, and other taxable benefits etc, less any pension contributions that are paid gross.
  • Step 2: Deduct the grossed-up amount of any gift made under Gift Aid.
  • Step 3. Deduct the grossed-up amount of pension contributions paid in accordance with s.192 FA 2004 (where your pension provider has already given you relief at the basic rate).
  • Step 4. Add back any relief under section 457 or 458 (payments to trade unions or police organisations) that was deducted in calculating the individual’s net income for the tax year.

Adjusted Net Income is calculated slightly differently from Relevant Earnings for pension purposes.

Small print:

From section 58 ITA 2007


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Is the adjusted net income. Based on your gross Income figure or your Net income take home figure? It states your 'total taxable income' I'm reading it as the same as your gross taxable income if salaried?

Example of my Gross salary is 120k and...

Is the adjusted net income. Based on your gross Income figure or your Net income take home figure? It states your 'total taxable income' I'm reading it as the same as your gross taxable income if salaried?

Example of my Gross salary is 120k and my take home is 80k with no other incomes or contributions what would be my net income 120k or 80k ?

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